Happy Monday - at least for me and all University of Utah football fans who saw their team whoop up on the Oregon Ducks, 62-20. The Utes were completely dominant in every phase of the game but unfortunately that doesn't help the mortgage bond market. As far as the bond market is concerned, August Pending Home Sales were -1.4% vs. expectations of .5%. This is mostly due to a lack of good inventory with the the YOY number at 6.1% which is good. The Personal Income and Expenditures numbers came in about as expected and have little to no impact on the bond prices.
As far as the technicals are concerned, the resistance levels were lowered to 103..95 and 104.13 respectively after three small down days in a row followed by some modest buying today. The 200 day moving average is right around 104.13 which makes that resistance level extra strong. Additionally, the bias has appeared to change with the RSI now right at the overbought level which typically occurs when we've had a big run-up. In a situation like this, it's a sign that the bias has changed or is changing so it's something to keep our eye on over the next few days to see if it holds. All else being equal, if there is no major economic news or global events, this would be a major headwind for any bond price increases (rate decreases) and could lead to some selling (raising interest rates / borrowing costs). Currently the FNMA benchmark bond is at its high for the day, up 20 basis points at 104.06.
On tap for this week is lots of big economic data with Case-Schiller Home Price Index, Chicago PMI, consumer confidence, ISM Manufacturing and the big ones are all of the jobs data / reports which include the ADP Private Payrolls reports on Wednesday, Jobless Claims on Thursday, and Non-farm Payrolls and Unemployment reports on Friday. With what appears to be a change in bias in the bond market and lots of data that could influence traders and ultimately the interest rates, I would probably lock sooner rather than later. While the data may not be earth shattering, if there truly is a bias change then any good economic news could be magnified and could possibly trigger a sell-off. I will be out of town on Thursday and Friday with no internet and little to no phone service and my not be getting back until sometime Monday, depending on how things go, so after Wednesday, you may not hear from me until next Tuesday (feel free to miss me). For now, I'm here and happy to help in whatever capacity you need my help. Make it a great day and a better week.